Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Dolly Varden at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ivanhoe Energy and Dolly Varden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and Dolly Varden Silver, you can compare the effects of market volatilities on Ivanhoe Energy and Dolly Varden and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ivanhoe Energy with a short position of Dolly Varden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Dolly Varden.
Diversification Opportunities for Ivanhoe Energy and Dolly Varden
The 3 months correlation between Ivanhoe and Dolly is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver and Ivanhoe Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ivanhoe Energy are associated (or correlated) with Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Dolly Varden go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and Dolly Varden
Assuming the 90 days horizon Ivanhoe Energy is expected to generate 2.77 times less return on investment than Dolly Varden. But when comparing it to its historical volatility, Ivanhoe Energy is 1.24 times less risky than Dolly Varden. It trades about 0.02 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 63.00 in Dolly Varden Silver on March 6, 2024 and sell it today you would earn a total of 54.00 from holding Dolly Varden Silver or generate 85.71% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Ivanhoe Energy displayed solid returns over the last few months and may actually be approaching a breakup point.
Compared to the overall equity markets, risk-adjusted returns on investments in Dolly Varden Silver are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dolly Varden showed solid returns over the last few months and may actually be approaching a breakup point.